-- Just as optimism is growing among investors that a rally in US Treasuries is about to take off, one key indicator in the bond market is flashing a worrying sign for anyone thinking about piling in.Global Investors Turn Cautious on Once Favorite Japanese Stocks
This matters because it means the market is pricing in a much more elevated floor for yields. The practical implication is that there are potential limits to how far bonds can run. This should be a concern for investors gearing up for the kind of epic bond rally that rescued them late last year.For now, the mood among investors is growing more and more upbeat. A Bloomberg gauge of Treasury returns was down just 0.3% in 2024 as of Friday after having lost as much as 3.
The true level of the neutral rate, or R-Star as it is also known, has become the subject of hot debate. Reasons for a possible upward shift, which would mark a reversal from a decades-long downward drift, include expectations for large and protracted government budget deficits and increased investment for battling climate change.
The performance of financial markets also suggests the Fed’s policy may not be restrictive enough. The S&P 500 has hit records almost on a daily basis, even as shorter maturity inflation-adjusted rates, cited by Fed Chair Jerome Powell as an input for gauging the impact of Fed policy, have surged nearly 6 percentage points since 2022.
June 28: Personal income and spending; PCE deflator; MNI Chicago PMI; University of Michigan sentiment ; Kansas City Fed serviceJune 25: Fed Governor Michelle Bowman; Fed Governor Lisa CookTrump Wants To Eliminate Income Taxes: Here’s What That Would Mean for the Economy and Your Wallet
Finance Finance Latest News, Finance Finance Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Source: BNNBloomberg - 🏆 83. / 50 Read more »